It was difficult to miss this Sunday Times lead real estate article with a splashy front page reference, and the full front page of the real estate section.
A quick reference tool produced by the Times for Eastside values and appreciation rates can be misleading if you don’t read between the lines and interpret the information relative to your own home . Select a neighborhood and you’ll see a list of data. The concern we have is with the last two lines:
Average Price Change 2004-2005………………. X%
Average Annual 5-Year Change……………………Y%
The percentages shown are impressive if you’re thinking “my house appreciated 20+% between 2004 and 2005?”, or “my house appreciated over 12% per year for the last 5 years, i.e. 60% ?” However, it is important to keep this in the perspective of median pricing as discussed in previous posts. The bulk of the sales were below $550,000, almost double the volume of sales above that number. The driving force behind the Times’ averages comes from the lower priced properties: many, many more buyers buyers competing for the same product combined with zero supply of new homes in that price range caused those values to soar.
Conclusion: your home you paid $950,000 for in 2001 is not likely to fetch $1.5 million today. By comparison, if you paid $350,000 for a nice late 70’s home on Education Hill in 2001, your value today is likely over $500,000.
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